The government is seeking Sh60 billion from the domestic market through two long-term Treasury bonds, giving investors a chance to earn fixed returns of up to 12.873% as the State raises money to support its budget.
The Central Bank of Kenya (CBK) has reopened a 20-year fixed-coupon bond, FXD1/2019/020, alongside a 30-year fixed-coupon security, FXD1/2026/030.
The 20-year bond has 12.6 years remaining before it matures on March 21, 2039. It carries a coupon rate of 12.873%.
The 30-year security, on the other hand, has 29.6 years left to maturity and offers a 12.5% coupon rate. It is due for repayment on March 13, 2056.
Both bonds are subject to a 10% withholding tax, with the CBK stating that proceeds from the sale will go towards budgetary support.
The offer opened on September 8, with investors given until 10 am on September 16 to submit their bids. The auction will take place on September 21, with settlement also scheduled for the same day.
The CBK will use a multi-price auction, allowing investors to submit either competitive or non-competitive bids.
Those making competitive bids must invest at least Sh2 million per CSD account for each bond tenor. Non-competitive applications will start at Sh50,000 but will be limited to a maximum of Sh50 million.
Only investors with active DhowCSD accounts will be allowed to participate.
Successful bidders will make payments using instructions provided through the CBK DhowCSD Investor Portal or its mobile application.
“All successful bidders should obtain the payment key and amount payable from the CBK DhowCSD Investor Portal/App under the transactions tab on Friday, 18-Sep-2026, for FXD1/2019/020 and FXD1/2026/030.” The prospectus stated.
The central bank has cautioned investors who fail to pay for bonds allocated to them, warning that they could lose access to future government securities offers.
“Defaulters may be suspended from subsequent investment in Government Securities.”
The CBK has also reserved the right to accept only part of an investor's application or reject it altogether.
“The Central Bank reserves the right to accept applications in full or part thereof or reject them in total without giving any reason,” the prospectus stated.
Trading in both bonds on the secondary market will start on September 21. Transactions will be carried out in multiples of Sh50,000, with the securities also set to be listed on the Nairobi Securities Exchange.
The bonds will offer other benefits to investors and financial institutions beyond the regular coupon payments. Eligible financial institutions can use them to meet statutory liquidity requirements, while investors can pledge the securities as collateral when seeking loans from regulated financial institutions.
The CBK will also provide rediscounting as a last-resort option. Under the terms of the offer, the bonds will be rediscounted at 3% above either the prevailing market yield or the coupon rate, whichever is higher.
The latest offer comes as the government continues to depend heavily on domestic borrowing to meet its financing needs, including covering fiscal deficits and paying off maturing debt.
The National Treasury says government borrowing each financial year is meant to finance fiscal deficits and settle obligations that fall due.
Kenya's 2026 Medium-Term Debt Management Strategy gives a bigger role to domestic borrowing, targeting 84% of gross borrowing from local sources over the medium term.
The strategy also aims to cut reliance on short-term Treasury bills while increasing the maturity period of government debt through medium- and long-term securities.
The Treasury has said it will give priority to medium- and long-term Treasury bonds in the local market as it seeks to lower refinancing risks and spread government debt repayments over a longer period.
For investors, the reopened securities provide an opportunity to secure fixed coupon payments for many years, while the government gets additional funds for budget support.
The 20-year bond will pay coupons twice a year until its March 2039 maturity, while the 30-year security will continue making coupon payments until March 2056.
The CBK has also indicated that the two bonds could be reopened again in future.
Investors interested in the offer have been advised to obtain more information from the CBK Financial Markets Department, CBK branches and currency centres, as well as commercial banks, investment banks and stockbrokers before placing their bids.